Vector Gas' assets comprise gas transmission pipelines, and gas distribution networks outside of Auckland. Vector Gas is also a leading provider of unregulated pipeline management services and is the technical and system operator for the Maui Pipeline.
Vector believes this is a great outcome, further strengthening our balance sheet to fund organic growth in Auckland and pursue attractive unregulated growth. The proceeds will initially be used to repay debt.
In addition, Vector is also pleased to enter a Memorandum of Understanding with First State Funds to consider opportunities to co-invest in regulated and unregulated energy infrastructure, both in New Zealand and offshore, and to co-operate operationally on gas distribution activities.
First State Funds comprises two infrastructure funds managed by First State Investments (known in Australia as Colonial First State Global Asset Management), which is a leading global infrastructure asset manager, with approximately NZ$7 billion of equity invested in infrastructure assets across Australia, New Zealand and Europe.
The sale is conditional only on approval under the Overseas Investment Act 2005, and by the shareholders of Vector, which will be sought at a special meeting expected to be held in December. Settlement is scheduled to occur 10 business days after satisfaction of the conditions.
Vector will be working with First State Investments over the coming months to ensure a smooth transition with a view to completing the transaction by 31 March 2016.
Vector remains committed to maintaining a sustainable dividend, and the sale will not result in a special dividend or a share buyback.
Vector acknowledges Goldman Sachs who acted as the company's financial advisor throughout the strategic review process.